anys come statement for the year ended December 31, 2025, contained the following condensed information. Service revenue Operating expenses (excluding depreciation) Depreciation expense Loss on sale of equipment Income before income taxes Income tax expense Net income Accounts receivable Accounts payable Income taxes payable 2025 2024 $39,000 $53,000 32,000 40,000 Oriole's balance sheet contained the following comparative data at December 31. 4,200 $624,000 60,000 26,000 8,300 $839,000 710,000 129,000 39,000 $90,000 (Accounts payable pertains to operating expenses.) Prepare the operating activities section of the statement of cash flows using the direct method.

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Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.